An outline on the economics of production and distribution of healthcare services. Remarks on the fallacious thinking that State-operatives are not "profit-driven" that is the basis for supporting literal (quasi-)monopolies.
In very short
- "Public" (i.e., funded by State-bureaucrat-approved subsidies) healthcare providers are merely "private" firms that are provided conditional subsidies by the State thanks to which they are able to provide "free" or "substantially cheaper" healthcare services.
- (Mandatory insurance advocates argue for providing such subsidies to such an extent that the cost of healthcare will be as cheap as possible, if not "free". These subsidies will in turn have to come from the State redistributing assets within wider society, leading to a myriad of indeterminate opportunity costs which may paradoxically in total lead to a decreased welfare. Worst of all, such extensive subsidization isn't even guaranteed to ensure that the "right to healthcare" is enforced, in spite of the increased impoverishment resulting from it)
- All that "public" healthcare providers have to do in order to continue receiving these subsidies is to satisfy a set of minimum criteria set by supervising bureaucrats. This in turn creates a fundamentally distorted incentive structure: such "public" firms don't even have to directly account for patient satisfaction, rather bureaucrat approval.
- At least with the "private" (i.e., voluntarily funded) healthcare providers, their incentives lie directly with patient satisfaction: in the ruthless healthcare service market, "private" healthcare providers will only receive revenues insofar as they manage to get patients to decide to pay them directly out of all actors. Thus guaranteed ruthless competition, unless hampered by the aforementioned State-subsidization or other distortions, will necessarily lead to a tendency towards lower costs and increased quality, as it does in all other markets subject by unhampered competition,
In short
- Mandatory insurance advocates (henceforth abbreviated as "MIAs"; i.e. proponents of "universal healthcare"), whether they realize it or not, advocate for a planned economy in the healthcare industry. The only way that a "right in healthcare" can be enforced is if each citizen may at all times, or at least in "adequate time", be able to access the necessary healthcare services they are in need of. To enforce such a right, the State will have to be able to extensively direct and redirect assets within the economy. Generally, that intervention takes the form of high taxes, which, notwithstanding the myriad of indeterminate opportunity costs which emerge from that, will also be inefficient due to being centrally planned. Given that said central planning even attains its desired result, which it reliably doesn't, attaining that result will come at a great indeterminate societal cost.
- MIAs usually feel a false sense of relief when they hear that mandatory insurance eliminates claim denials, forgetting that if demand exceeds supply, then you will either way suffer the risk of being de facto denied coverage by having to wait for a very long time in a very dire moment.
- MIAs also unwarrantedly demonize (see the section "Being profit-driven =/= being avaricious. Debunking some myths about voluntarily-acquired healthcare provision" below) healthcare providers in the "private" (i.e., voluntarily-funded) sector, thinking that those in the "public" (i.e., State bureaucrat-funded) sector are less prone to negligent behavior. This line of reasoning misses that "public" providers are as incentivized to want to earn as much money for as little effort as possible. The only real difference between a "private" firm and a "public" firm is that the latter only has to satisfy a minimum set of criteria set by their supervising State-bureaucrats in order to continue receiving the subsidization thanks to which they are able to provide healthcare services "for free", whereas the former is entirely dependent on receiving voluntary payments in a highly competitive market, which will necessarily entail a tendency towards lower costs and higher quality. Very perversely, the MIAs forget that the "private" healthcare providers are the ones the MOST responsible to patients' desires. The "public" providers depend entirely on bureaucrat approval which doesn't even necessarily have to mirror patient desires, whereas the "private" providers depend entirely on patient desire since without patient payment, these "private" providers will not earn any revenues.
Why healthcare services are provided
Because people find aspects of their physical health unsatisfactory and may consequently seek out means by which to bring their physical health into satisfactory states of affairs.
If people were indestructible and immortal, healthcare wouldn't be needed.
The mandatory insurance vs freedom of choice debate is merely a debate over how to allocate resources for production and distribution of scarce healthcare services
The mandatory insurance ("universal healthcare") vs freedom of choice debate is one about economizing healthcare services
Healthcare services are not limitless, and demand for these may exceed their supply. Due to this, different systems for economizing these scarce and competed-for healthcare services.
The ideal scenario: supply would always meet demand
If for example some super AI was created that could meet anyone's healthcare needs without any cost, then the mandatory insurance vs freedom of choice debate would be superfluous since the economizing of healthcare services wouldn't be a problem.
The siren song of mandatory insurance (euphemized as "universal healthcare")
The emotional and recursive "through government, anything is possible" mindset underlining the mandatory insurance advocacy
Mandatory insurance advocates (henceforth abbreviated as "MIAs") find it (understandably) unacceptable that some individuals may be unable to or just be barely able to afford life-saving healthcare services. Most MIAs arrive to their position through reflexive emotional thinking, not by careful contemplation of political economy, which can be demonstrated by the shocking economic illiteracy exhibited by the very vocal MIAs who in spite of seemingly all not even knowing the basics of insurance boldly advocate for mandatory insurance. MIAs want the demand for necessary healthcare services to be met, for there to be no shortage in healthcare services.
In other words, MIAs are convinced that a healthcare system in which no one will die due to not being able to access healthcare services, be it due to a lack of ability to pay or due to waiting time (but especially due to inability to pay since that's what MIAs usually overfixate on in a kind of perverse manner, since at least denials of coverage are transparent and overridable), can be created in the near future if the State just gets to take over the healthcare industry and reason from this point to prove their point in a confirmation-bias manner.
Due to their reflexive thinking, they usually fall into a recursive kind of "through government, everything is possible" attitude, whose details will be elaborated below. The core of this reflexive recursive mindset is that vague gestures at "the State can fix this somehow" becomes the typical line of reasoning for the MIA, i.e., the MIA doesn't have a comprehensive answer, so when they are presented a glaring problem in their current proposal, they will suggest something new to remedy that specific problem and then when something new is presented, they will suggest something new in a recursive and reflexive manner.
Demand-side subsidization
The way by which one can ENSURE that people will be able to AFFORD (though, not necessarily, obtain) such necessary healthcare services is by adequately decreasing its price, usually done by subsidization. Since MIAs' objective is to ensure that NO ONE will die due to an inability to pay, it will lead to complete subsidization.
The glaring problem with this approach is that such a subsidization will make the effective demand exceed the supply, making their proposed healthcare regime come back to square one where some peopel will die due to an inability to access necessary healthcare services in due time.
The subsidization leads to to healthcare being provided on a rationing basis. Sure, triage will be able to sort resources to a certain extent, but the excessive effective demand will inevitably lead to suboptimal allocations due to resources being locked in specific procedures at inopportune times.
The consequent supply-side subsidization and planned economy in the healthcare industry, leading to indeterminate societal opportunity costs
Basically, mandatory insurance establishes a planned economy in the healthcare industry, with all the flaws entailed by that. For healthcare to be a human RIGHT means that every citizen will have to at all times be able to be allocated sufficient healthcare services. For this to be ensured, the State has to be able to aggressively redistribute resources from civil society for that provision, which will necessarily entail a wide range of distorting effects leading to a myriad of indeterminate societal opportunity costs.
Sure, the State might be able to brute-force itself to acquire sufficient resources by which to enforce the "right to healthcare", but this will come at a great societal opportunity cost due to the State brute-forcing said provision like it does. To the MIA, that might not even be a concern however, since the opportunity costs will be indeterminate, but the ensured right to not die (given that this planned economy even works out) due to an inability to pay will be concrete, thereby making it vaguely seem "worth it" as said "right" will be seen as being so high priority.
For a further elaboration, see:
- Decoding mandatory insurance advocates' euphemistic language
- Mandatory insurance is also subject to market forces
- 'Single-payer' makes bureaucrats the directors of healthcare
- The flaws of mandatory insurance ('universal healthcare')%22)
- A fatal problem with mandatory insurance: long waiting queues
- Imposing mandatory fees doesn't excise the bureaucratic bloat
- 'If universal healthcare is so bad, why do so many have it?'
- Best evidence that the US healthcare system is cronyist
- Evidence that the US healthcare is cronyist
- Instances of mandatory insurance failing
"Public" healthcare providers (euphemism for "State-subsidized healthcare firm") are also profit-driven - they also want to be paid as much as possible and do as little as possible
Being profit-driven =/= being avaricious. Debunking some myths about voluntarily-acquired healthcare provision.
See
- Confusion regarding the nature of a free market in healthcare
- In a functional justice system,defrauding insureds is PUNISHABLE
- Cronyism isn't an inevitable consequence of market economies
- 'In emergencies, private healthcare providers can extort you!'
Basically, "in a free market, the insurance agency is going to drop you at your low-point!" is a complete myth and misunderstanding.
"Public" providers also want as much money as possible for the least amount of labor. This they do by acheiving the bare minimum required by them from their supervising bureaucrats.
The way that they do that is by satisfying the minimum standards imposed on them by those bureaucrats that allocate them the subsidies by which they are able to not have to depend on customer payment.
The core difference between a "public" healthcare provider and a "private" one is that the former is able to receive subsidies by State-bureaucrats thanks to which they don't have to rely on customer payments, unlike the latter.
What MIAs perversely forget then is that the private healthcare providers are in fact the ones MOST responsible to customer desires - they only keep afloat insofar as they actively please customer desire in a highly competitive market. Bureaucratically-funded, as opposed to customer-funded, only have to please their State-bureaucrat supervisors, which leads to a fundamentally misaligned incentive structure.